Working sustainably and strong core values construct safe business

Peab stands strong. After our best result ever in 2018 we start 2019 with a well-filled order backlog, strong financial position and four collaborating business areas that together give Peab breadth and stability and spread our risks.

We can look back on a successful 2018 with higher net sales, profits and margins for the Group. All our business areas developed positively and we enjoyed the effect of all the work we have put into building a stronger and more stable Peab. Operating profit was a high of SEK 2.6 billion with an improved operating margin of 4.9 percent. Although the level of orders received was slightly lower towards the end of the year it totaled SEK 51.1 billion for the entire year, which meant an outgoing order backlog of SEK 45.8 billion. Construction and Civil Engineering, which perform contract work, delivered higher net sales and profit and Industry reported clearly improved profit. In Project Development a weaker housing market led to slightly lower net sales and profit in Housing Development while Property Development reported higher profits in our wholly and partially owned property holdings. Cash flow and net debt were affected during the year by more tied up working capital and continued investment in machinery and our operations and investment properties. The Group equity/assets ratio at year-end was 30.4 percent, a great deal more than our goal of 25 percent.

Different conditions in a market going sideways

The housing market in Sweden is expected to continue to contract in 2019 while other building construction is expected to remain on the same level. Housing and other building construction is expected to level out in Norway. The construction market in Finland is expected to increase in housing and develop sideways in other building construction. The civil engineering market conditions in Sweden and Norway are expected to continue to be good in 2019, primarily driven by government infrastructure investments. Stable economies in the Nordic region and a substantial underlying need provide a solid foundation for the construction market over time.

Nordic community builder works sustainably

For Peab responsible entrepreneurship means working sustainably. Our sustainable work is based on the UN’s Global Compact (which we support), the global goals for sustainable development, our core values, business concept, vision, strategic goals and our Code of Conduct. We have established our focus areas and business plan for 2018-2020 taking the sustainable aspects Social, Environment and Economy into consideration. We have also identified risks in each sustainable aspect. Our focus areas and business plan goals guide us when we implement and concretize our sustainable work so that every employee can include it in their role and daily work.

Important steps towards a healthy industry and safe business

The past two years Peab has worked hard for a sustainable industry where healthy competition flourishes. There is still a substantial competency challenge in the industry and to handle it, and provide customers with the products and services they demand – at the right time, for the right price and with the right quality – we need both domestic and foreign labor. A more open labor market puts higher demands on having a clear set of rules and equal terms. This is a major challenge in our industry since it is complex and consists of so many players. We have continued our work with safe business in 2018 taking a number of measures such as stricter self-monitoring, tighter purchasing steering and more proactive risk management. At the same time we have made tougher demands on other parties. We have also engaged in different collaboration projects where together, through transparency and common procedures, we have gradually formed a healthier industry. Today knowledge and openness in these matters is much more widespread but there is still a lot more to do. Healthy competition and safe business will continue to be among our highest priorities going forward.

Diversity by developing people

Peab consists of 15,000 skilled, committed people. One of the issues closest to my heart as CEO is the desire for each one of them to feel included, that they own our core values and that they can develop to their full potential in the company. This builds and spreads the Peab spirit: a culture that both attracts and retains diversity. While we develop our employees we continue to work to broaden the industry and open it up for other talented people. This is why we continue to teach every employee about diversity and equal treatment and actively develop our safety culture. At year-end we reached our goal with The 100 Club when 102 adult immigrants had either been trainees or begun working at Peab. At least that many youths have received a Swedish education through the Peab School. I am proud of our integration work and thankful for all our new, competent personnel.

We have learned a lot about including people with different backgrounds in recent years. Now the work continues.

A broad business model creates stability and a strong offer

We have a unique business model where 15,000 employees that share the same core values are united in four business areas and together create total solutions for our customers.

Our business areas give us a competitive edge and unique collaboration opportunities for rational and quality ensured production, from a to z. By increasingly using conceptualized construction methods and tech solutions we intend to take quality and efficiency a step higher for our customers in 2019. Our people, core values, business models and modern production methods all lead to achieving our strategic goals; to have the most satisfied customers, be the best workplace and the most profitable company in the industry.

60 years of community building

Peab started in 1959, which means we turn 60 this year. Our fantastic company is still building communities on the same foundation as then, underpinned by our values and our desire to build for people. Now I look forward to furthering this work. We have been constantly developing for 60 years but we have never forgotten our roots. This balance makes Peab unique and sustainable.

I want to thank each and every one of our skilled, committed employees: you who are with us today, and you who were with us 60 years ago and helped lay the first cornerstone of this unique company.

We build Peab together.

4.9%

The operating margin improved to 4.9 percent compared to 4.8 percent in 2017.

SEK 45,8 billion

The order backlog at the end of 2018 was record high SEK 45.8 billion (40.2).

“Our business model with four collaborating business areas creates opportunities throughout the entire value chain in our projects.”

Peab AB is a public company, Company ID 556061-4330. Domicile Båstad, Sweden.

All values are expressed in Swedish krona. Krona is abbreviated to SEK, thousands of krona to TSEK and millions of krona to MSEK. Numbers presented in parentheses refer to 2016 unless otherwise specified.

Data regarding markets and the competition are Peab’s own assessments, unless another source is specified. These assessments are based on the best and latest available facts from, among others, previously published material.

- Peab takes work environment matters very seriously and works systematically to create safe workplaces. The kind of safety equipment used varies depending on national regulations and the type of operations. A risk analysis is always performed for each workplace before any exception is made.

- The people pictured in this publication are wearing personal safety equipment required by regulations valid for the operations and country they are in.